29 November 2016 – Expansión
On 21 December 2015, Merlin Properties became the first real estate company to enter the selective Ibex 35 since the burst of the real estate bubble. And for just over a month now, it has led the ranking of the largest Spanish real estate groups, following its merger with Metrovacesa. The Socimi, led by Ismael Clemente, has marked this milestone just two years after making its debut on the stock market.
In an interview with Expansión, the CEO of Merlin Properties, Ismael Clemente, has confirmed that he is committed to ensuring that the banks that have just become shareholders of the Socimi will stay for the long haul. He is also commited to maintaining a high level of shareholder remuneration.
Following the integration with Metrovacesa, Merlin has increased its real estate portfolio to €9,500 million and has incorporated three new shareholders: Santander, which is now its largest shareholder, with a 22.2% stake; BBVA, with 6.4%; and Popular, with 2.8%.
“There is no formal commitment that the market is not already aware of. But, from a factual standpoint, we think that, given where Santander and BBVA have placed their stakes (in industrial investments), they will hold onto their share capital for much longer than the market expects, because they can see that we are a company with great potential and a strong dividend yield, which we will maintain over the medium term”, said Clemente.
The Director said that the banks are the new high profile shareholders of the Socimi, but added that they are not interfering with the management of the business. In this sense, Clemente commends the appointment of the directors who will control the banks’ stakes and, specifically, that of Rodrigo Echenique, the former Chairman of Metrovacesa and the Chairman of the Board of Directors of the new Merlin. (…). “He is much more gifted than I am in terms of his experience and professional career”.
Clemente says that the historical shareholders “have reacted well” to the incorporation of the banks into Merlin’s capital. (…).
The Director revealed that the Socimi’s shareholder remuneration policy will continue with a stable dividend, through the sum of ordinary and extraordinary payments – in the event that divestments take place – and will maintain a high pay out, based on cash flow.
Clemente explains that the company is not planning to undertake any more capital increases in the short term. “We do not know what stage of the market we are in. We are unsure as to whether the share price will continue to reflect a discount compared to NAV (net asset value) or will return to a premium” (…).
In addition, the Socimi has set itself the objective of reducing its level of indebtedness. To this end, it has launched several bond issues this year. In October, it placed €800 million of bonds to allow it to finance Metrovacesa’s bridge loan amounting to €500 million and to pay off some other debts.
“We do not have any significant maturities until 2021 and, from here, a stable calendar of maturities will begin, which we will have to refinance like any other company in the sector.
In terms of the behaviour of the Socimi’s share price, Clemente acknowledges that, since December last year, the firm has entered a “very negative dynamic”, which he blames on the political instability in Spain. (…).
Nevertheless, Clemente is steadfast (…) adding: “We can only work to improve NAV per share. What’s more, we have a generous dividend working in our favour”.
Original story: Expansión (by Rocío Ruiz and Rebeca Arroyo)
Translation: Carmel Drake